With relatively little news out from the UK we saw minimal movement from GBP against its major counterparts. We did however see the first signs of weakness for the UK economy earlier in the week with UK house prices rising by -0.6% month on month, which was also matched by sharp decrease in new mortgage approvals.
These two figures combined with falling construction output in an economy driven by the house prices represented the first signs of weakness. To counter this relative negative data, we have had survey releases from the UK that stated business sentiment is at its most positive in the UK than the other G10 nations.
The growing optimism and improvements in business output could be ready to take up the slack from the small losses in the housing market.
The Greenback fluctuated between gains and losses verses the Euro amid speculation Yellen will offer further insight to when the Fed intends to commence with interest rate increases. Despite growing calls for the Fed to increases interest rates analysts are not anticipating any adjustment until 2016, with June being the earliest touted month.
US bond auction uptake was at its highest on the back of Portugese bank, Spirito Santo, missing the debt repayment last week, whilst also reporting they may struggle with future repayments. Although we haven’t seen the FX markets react to this yet, we may see some USD strength in the short to mid-term with people seeking safe-haven assets again.
Having decreased interest rates to .15% the ECB announced last week that Europe is still subject to low inflation. Draghi is acutely aware of the issues that face him with calls for further intervention ringing loud around the Euro-zone.
In June ECB identified lending to companies and households as a key weakness in the euro area’s fragile recovery. The so-called TLTRO program, part of a wider package of measures announced in June, offers as much as €700bio of low-cost funding tied to bank lending.
10:00 - EUR - Euro-Zone Industrial Production (MAY) expected to contract 1.2%
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Daily Market Report - 14/07/2014